State-run Petrobangla has scaled down its fiscal requirement by over a quarter to Tk 40 billion to purchase LNG from global suppliers until June.
The oil and gas corporation has sent a letter to the Ministry of Finance (MoF) this week through the Ministry of Power, Energy and Mineral Resources (MPEMR) for the fiscal support to foot LNG import bills, a senior Petrobangla official told the FE on Thursday.
In October last, Petrobangla had sought Tk 54 billion as fiscal support from the government for LNG import during fiscal year 2019.
The import of less-than-expected quantity of LNG from the global market and its price fall in the international market has prompted Petrobangla to slash its fiscal requirement, the official added.
While it reduced its requirement by 26 per cent, the amount is 29 per cent higher than the estimate of the country's energy regulator over Petrobangla's need for subsidies worth Tk 31 billion as it did not hike gas tariff.
He said that the government had not provided any fiscal support to Petrobangla yet even after the LNG imports.
The government had assured the corporation of providing at least Tk 5.0 billion by December last.
Petrobangla and its subsidiary gas marketing and distribution companies had submitted proposals in early 2018 to the Bangladesh Energy Regulatory Commission (BERC) to raise domestic gas price for all types of consumers except households.
But the BERC turned down the proposals, keeping the natural gas tariff unchanged as the volume of LNG imports was less than expected.
Petrobangla has been importing around 300 million cubic feet per day (mmcfd) of natural gas, but the company along with its subsidiary gas companies had sought a hike in natural gas tariff calculating LNG imports to the tune of 1,000 mmcfd, or over three-times the current level.
The waiver of supplementary duty (SD), customs duty (CD) at the consumers' end lowering of advance income tax (AIT) by the National Board of Revenue (NBR) also helped it a lot for this decision, an official said.
Such a concession also helped the corporation to keep the domestic gas price unchanged even after the import of expensive LNG.
The revenue board lifted 122 per cent tax on the locally-produced natural gas at the consumers' end to keep the blended gas price rational.
It only slapped a 15 per cent value added tax (VAT) on the imported LNG.
The country has started consuming re-gasified LNG commercially since August 18.
Bangladesh received its first LNG cargo on April 24 as the US-based Excelerate Energy brought in its floating, storage and re-gasification unit (FSRU) carrying 136,000 cubic metres of lean LNG from Qatar's RasGas.
The LNG import is expected to go up soon with the increase in demand and the construction of the second floating LNG terminal by April this year.
azizjst@yahoo.com